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STADE, Germany (Reuters) - German Chancellor Angela Merkel doesn't make rousing speeches, but she had 1,200 supporters wildly cheering her standard sober delivery, fired up about their brightening chances of winning a key regional election on Sunday.

At a campaign rally in the northern town of Stade late on Thursday, Merkel and Lower Saxony state premier David McAllister exhorted an enthusiastic crowd of Christian Democrats (CDU) to ensure a high turnout for the election of the regional assembly, which in turn chooses the state premier.

Merkel's CDU has been battered by the centre-left Social Democrats (SPD) and Greens in 12 regional elections stretching back to 2009. A come-from-behind win in Lower Saxony would end that losing streak and give the chancellor a timely lift for her own re-election hopes in September.

"We're all excited about the outcome on Sunday," said Merkel, who is seeking a third term against the SPD, which is on the ropes thanks to blunders by Peer Steinbrueck, its candidate for Merkel's job.

"And it's not only the people of Lower Saxony who are interested in this election. It's a pivotal election. So get out and talk to your friends and neighbours and tell them how important this is," she added.

SWING STATE

Lower Saxony, an industrial and farming heartland and Germany's fourth most populous state, can go either way; both the centre-left and centre-right have taken turns running the vast region bordering the Netherlands and North Sea.

If the CDU can hold power in Lower Saxony for a third straight term on Sunday, it would send a powerful signal across Germany and galvanise Merkel supporters.

It would also prevent the opposition from getting a blocking majority in the Bundesrat upper house, where the 16 federal states are represented, which could make life difficult for Merkel's centre-right coalition.

That explains why Merkel, who has become one of Germany's most popular leaders for her handling of the euro zone debt crisis, has invested so much time in Lower Saxony. Her campaign stop in Stade was her seventh in the last two weeks.

An opinion poll in Lower Saxony on Thursday showed a dead heat at 46-percent for both sides. The CDU were on 41 percent and their Free Democrat (FDP) allies 5 percent. The SPD were at 33 percent and their Greens allies at 13 percent.

Just six months ago, the SPD were in front with 36 percent and the Greens had 13, while the CDU appeared doomed at 32 percent, with their FDP coalition partners on 4 percent - below the 5 percent threshold needed to win seats.

"Our numbers are rising, and their numbers are going down," said McAllister, 42, a gifted speaker and rising star in the CDU whose Scottish father came to West Germany as a soldier.

"It's like we've caught up with them on the motorway in their car painted in their red and green colours," said the man seen as a potential successor to Merkel.

"We look over and see them sitting nervously in their car. They're nervous because they were arrogant and thought they already had this election in the bag," said McAllister.

The SPD's gaffe-prone Steinbrueck has kept a low profile in Lower Saxony after becoming a liability for the party's local candidate Stefan Weil. By contrast, Merkel is a major attraction for voters at rallies like the one here in Stade, a prosperous town of 46,000, about 45 km west of Hamburg.

"OUR 'IRON LADY'"

German voters seem to genuinely like 58-year-old Merkel's cautious style of leadership and speech, in contrast with the bluntness that has got Steinbrueck in trouble.

"She's tough, she's strong, she gets the job done, and she doesn't waver," said Ute Claus, 52, a lawyer who watched Merkel and McAllister win over the crowd. "She's our 'Iron Lady'. Her speech was first class, and McAllister was out of this world."

Ruben Korff, 30, said he had no problem with Merkel's understated campaign style.

"She's a super chancellor because she manages every crisis well," the student said. "You can't say that about her rival. It doesn't bother me that she's vague. It's better to be cautious than promise too much and not deliver."

Long lines of supporters and curious locals waited in line for up to an hour in sub-zero temperatures to see Merkel and McAllister at the rally in Stade, where 3,000 people applied for 1,200 tickets.

"Things weren't looking so good a few months ago," said Heinz-Klaus Gerken, 67, a retired teacher. "Steinbrueck keeps shooting himself in the foot, and Merkel's popularity has helped. McAllister has also distanced himself from Christian Wulff."

Wulff, Germany's disgraced ex president, led the CDU to two wins in Lower Saxony in 2003 and 2008 before Merkel picked the then-popular state premier to run for president in 2010. Wulff was forced to resign a year later over financial irregularities.

Thorsten Matties, a 43-year-old salesman who called himself a swing voter, said he was leaning towards the CDU because "things are going pretty well" in Germany at the moment.

"Merkel's a fascinating person," he said. "She's stayed tough during the financial crisis, and she's one of the few people who never loses her cool, even when things get hectic. I like the way she stays so calm all the time."

(Reporting by Erik Kirschbaum; Editing by Stephen Brown and Will Waterman)